SHANGHAI, Mar 1 (SMM)—Aluminium smelters did not restock actively after CNY, while increased inventory prompted alumina plants to cut offers. As of February 26, the SMM alumina price index/SMM A00 aluminium price ratio hit a 4-year low of 0.136.

The domestic alumina prices are expected to rise slightly in the short term on multiple positive factors. Aluminium smelters will gradually restock, and a few of them made purchases in the second half of last week. Significant increase in aluminium prices put a floor under alumina prices. The overseas alumina prices are also expected to rise slightly as some traders will make higher bids to buy alumina for delivery of long-term orders following sharp rise in LME aluminium.

Affected by the extremely cold weather in Texas, a local alumina plant with an annual production capacity of 500,000 mt cut production due to energy shortages and rising caustic soda prices. Overseas alumina production capacity outside the United States was unaffected. Some of the US caustic soda is exported to South America and Jamaica Energy shortage and caustic soda production cuts will have limited impact in the short term, and SMM will pay attention to how long this issue will last. Although there has been no alumina transaction recently, the ocean freight rate from Western Australia to China was at least $30/mt, which is an increase of at least $5/mt from before the holiday. This has increased transportation costs of companies who did not sign long-term shipping orders, which may curb the buying interest of overseas buyers.

For more information on the silicon metal and aluminium markets, please subscribe to China Aluminium Weekly.